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Stock Commentary

8990 Holdings 'expands' buyback limit to P7-B of stock

Merkado Barkada
8990 Holdings 'expands' buyback limit to P7-B of stock

8990 Holdings [HOUSE 9.64, up 4.2%] [link] disclosed that its board of directors voted to “expand” a P2 billion stock buyback program that was originally established back in 2019, which was then suspended during the pandemic to conserve cash. The renovated buyback program will run for the next twelve months and be authorized to spend up to P7 billion to buy back HOUSE stock from the public float.


MB bottom-line: HOUSE only has a marketcap of around P48.8 billion at its current stock price, so with a buying power of approximately 756 million HOUSE shares, this buyback fund is theoretically big enough to buyback the entirety of the 13.21% public float (which is worth about P660 million at P9.25/share). HOUSE’s minimum float under a grandfathered version of the Minimum Public Ownership (MPO) rule is just 10%, which means that the fund can only really buy about 200 million shares (~P1.85 billion worth) before it buys too much, pushes the float below the 10% MPO threshold, and gets suspended. Is HOUSE the next company that could delist? The board just authorized triple the purchasing power needed to get the stock suspended, and more than enough to entirely wipe out the public float. Shrug emoji?

 

 

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